Experian to buy Mighty Net of Calabasas for $207.5 million
Credit report giant Experian is acquiring Calabasas-based Mighty Net, a far smaller rival in the business of selling consumers information about their files at the three large credit trackers -- TransUnion, Equifax and Experian itself.
Experian, based in Dublin, Ireland, is paying $207.5 million for Mighty Net, according to an Experian statement.
Mighty Net charges about $15 a month to allow consumers to continuously monitor their files and credit scores. The company operates three websites: CreditReport.com, CreditScore.com and MyCreditScore.com.
Mighty Net, founded in 1996, has about 680,000 U.S. subscribers, according to the statement. Experian, which offers some similar services, said it expects to improve the retention rate of Mighty Net customers and to sell them additional products, such as monitoring the Internet for possible use of stolen financial information.
Experian said "significant cost synergies in the areas of technology, infrastructure and back office function" will enable it to reduce Mighty Net's expenses by more than $5 million a year by 2013. It didn't say what effect that would have on the local company's workforce, and Mighty Net spokesman Bruce Cornelius couldn't be reached for comment.
Carter Malloy, an information technology analyst at Stephens Inc., estimated Experian has about 33% of the U.S. consumer credit monitoring and fraud protection market compared to Mighty Net's 5%. It's roughly a $2-billion-a-year business overall, with lots of growth potential, he said. Malloy called Mighty Net a "very attractive" target for Experian.
Some consumer advocates advise consumers not to spend money on credit monitoring, since anyone can obtain a free credit report annually from each of the credit report companies. Also, California requires companies to provide free credit monitoring to customers affected by data breaches, said Rainey Reitman, a spokeswoman for the nonprofit Privacy Rights Clearinghouse in San Diego.
"We don't think consumers should have to pay corporations to protect their identities," Reitman said. "Besides, these services don't prevent identity theft -- they just alert you after the fact -- and a lot of people mistakenly think they do."
But Malloy said credit monitoring services can be valuable for people who are about to make a major purchase on credit, apply for business financing or seek work, since many employers use credit checks to screen workers.
Mighty Net, which is privately owned, had 2009 revenue of $115 million and earnings before interest and tax of $28 million, Experian said in its statement.
-- E. Scott Reckard